Is strategic management living up to its promise?

Abstract

A 1993 study of strategic management in the United States, based on a survey of Business Week's top 1000 companies, shows that their 3-year average ROI grows with sophistication in strategic management. It also shows that the best planning firms excel in all stages of strategic management activities, with the worst ones rating themselves weakest in all stages. Likewise, the Chief Planning Officer in the best planning firms has a significantly higher profile and commands a larger bonus than his counterpart in weak planning firms. Chief planning officers in weak planning firms appear to be rewarded handsomely given their admitted weaknesses in strategic management and the low average ROIs of their companies. This appearance of progress, however, conceals some hidden problems. Three out of four senior managers expressed difficulty in all aspects of new business development, internationalization of plans, and in shifting from a ‘control’ mode of thought to a business-building and collaborative mentality. Most surprising was the weakness shown by unsophisticated companies in the most basic of strategic management activities—financial planning. Respondents were also asked to complete ten self-test questions that appeared in a 1992 Harvard Business Review article to determine the level of a senior manager's strategic management competence. We take issue with the authors' findings and approach. Both sophisticated and unsophisticated strategic management executives in our survey rated themselves as highly competent strategists, which is odd, since the latter rated themselves as weak in all strategic management activities. While most managers like to think they are strategists, only a very few know how to develop sophisticated processes and capabilities that produce superior results.